Context: Last week, Epic Games brought a motion to enforce the U.S. anti-anti-steering injunction it won in 2021 and which entered into force two months ago (March 13, 2024 games fray article). Instead of just deleting the anti-steering provision the court took fault with, Apple left it in place in some contexts and, which is worse, imposed a set of rules that effectively render the injunction useless with respect to in-app communications (and for out-of-app communications, it wasn’t needed anyway after a class-action settlement).
What’s new: Epic has received impressive support from amici curiae (“friends of the court”) who wish to help Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California see how Apple’s rules amount to non-compliance: Meta, Microsoft, X, Match Group, Spotify, and media industry body Digital Context Next, one of whose many famous members is Disney, a company that now appears much closer to Epic than to Apple (February 8, 2024 games fray article).
Direct impact: In this particular case, the amicus briefs are far more important than in the average litigation, as Epic saw its own Fortnite developer account terminated by Apple anyway. That also explains why Apple is surprisingly opposing those filings.
Wider ramifications: The U.S. enforcement fight also has interesting overlaps with the EU DMA enforcement situation (March 14, 2024 games fray article) as well as Spotify’s enforcement of a European Commission antitrust ruling that is very similar to Epic’s U.S. injunction as it is also about anti-steering (March 4, 2024 games fray article). Furthermore, the United States Department of Justice has filed an antitrust lawsuit against Apple that may pick up where Epic left off. There is a lot of misguided and uninformed commentary out there about those developments (also by analysts working for some of the largest banks), and games fray (which followed the EU Apple workshop on Monday and has conducted further research) will provide more information and share observations in the coming days and weeks.
This U.S. enforcement dispute is a unique if not unprecedented situation where the amici (third parties trying to assist the court through their observations) are actually in a better position to benefit from the very decision in question (Epic’s anti-anti-steering under California Unfair Competition Law, which is nevertheless of U.S.-wide effect) than the litigant they support. That is so because Apple ejected Fortnite from the App Store in August 2020. It will probably (unless there’s another dispute over that) stage a comeback in the EU (March 8, 2024 games fray article), which is, however, not in sight in the U.S. market.
If one adds up the number of U.S. iOS installations of the apps published by Epic’s amici, the number is at least in the many hundreds of millions or maybe even tops one billion. The average U.S. iOS user likely has several apps from those companies installed on an iPhone or iPad.
The amici don’t make fundamentally new arguments, but they add perspective. There is no question that what Judge Gonzalez Rogers had in mind when she entered the injunction in September 2021 was that Apple would have to allow unfettered (as long as not objectively objectionable) promotions within apps pointing to external purchasing options that Apple would not tax. But the lengthy ruling does say Apple has the right to be compensated for its IP, and that will be the most important one of various key issues here:
Free or not?
If Apple has to allow those links and promotional messages without taxing them, it’s easy. If the question is how much Apple may charge, there’ll be a whole new dispute over the right terms. That would effectively involve a rate-setting trial with expert reports before, expert testimony in court, and evidentiary motions. If the court is not prepared to do that as part of an enforcement proceeding (where the main litigation is already over and it’s “only” about compliance with the injunction), it means a whole new litigation would have to start over that.
Whatever the district court decides will be appealed anyway.
Epic’s motion and the amicus briefs raise a number of important issues, though games fray believes they have all missed one item that would allow Apple to defeat the purpose of the injunction even if the court agreed with 100% of the specific issues raised by Epic and its supporters. This is not the time and place to talk about that in public: games fray has reached out to a couple of key organizations about that question.
The funniest part of all the recent filings relating to the Epic v. Apple enforcement dispute is found in Digital Context Next’s motion for leave to file an amicus brief. With Apple not wanting any amici involved here, they all now have to get permission from the court to file. Digital Context Next’s members are a Who is Who of the media industry (DCN webpage), including (inter alia) AP, BBC, Bloomberg, Disney, Dow Jones, ESPN, FT, FOX, Hearst, Condé Nast, the Major League of Baseball, NBC, the New York Times, News Corp., NPR, Warner Bros., and the Washington Post. Here’s their motion:
Here’s the “reality distortion field” passage:
Apple’s late, legendary leader Steve Jobs was often said to have a “reality distortion field” that kicked in whenever he committed his team to overcoming an obstacle. Apple, through its so-called “Notice of Compliance”, Dkt. 871, is engaging in reality distortion on the grandest possible scale. Apple has done everything in its power to thwart and evade the injunction entered by this Court, and its “Notice of Compliance” brazenly flouts Apple’s noncompliance with this Court’s Orders. DCN submits this brief to urge the Court to see through Apple’s “reality distortion field” and enforce its injunction.
And this is the actual amicus brief that DCN wishes to submit:
Here’s the Meta-Microsoft-X-Match Group brief:
Finally, the Spotify brief, which was interestingly authored by the same lawyers who also represent Meta int his matter and which very surprisingly does not mention the anti-anti-steering decision by the European Commission (which should actually serve to reassure Judge Gonzalez Rogers that she did the right thing) and the related enforcement dispute:
Judge Gonzalez Rogers will now have to decide on whether to allow those amicus briefs. It would be extremely surprising if she denied those motions. Apple will oppose the motion, and Epic will get to reply. Then there’ll be a hearing and a decision (and an appeal). This process will take time, and games fray will continue to cover the topic.